Law Commission propose radical leasehold reform

The Law Commission has put forward radical new proposals aimed at delivering a fairer deal for leasehold homeowners.

Designed to give leaseholders security and control over their homes the proposals include:

  • Options for changing the valuation formula, making it easier for homeowners to buy the freehold
  • Removing the requirement that leaseholders must have owned their house for two years before making a claim
  • Replacing the current right of leaseholders to purchase a one-off 50-year lease extension at a high ground rent, with a right to acquire unlimited longer lease extensions without a ground rent. The Law Commission will consult on the period of the extension, which could be 125 years or 250 years (for example)
  • Improving and simplifying the enfranchisement procedure so that it is less likely to result in protracted and costly disputes between the parties.

Commenting on the proposals, Law Commissioner Professor Nick Hopkins said: “Enfranchisement offers a route out of leasehold but the law is failing homeowners: it’s complex and expensive, and leads to unnecessary conflict, costs and delay.

“We’ve heard of untold stress caused to homeowners who have had to put their lives on hold because of issues with their leases.

“Clearly, that’s not right, and our solutions for leasehold houses will provide a better deal for leaseholders and make sure that the law works in the best interests of house owners.”

Leasehold practices in England and Wales have been widely criticised over the past year after it emerged that some house buyers are being charged exorbitant ground rents. Direct Line estimates that the typical ground rent is currently around £371 per year and the Leasehold Knowledge Partnership claims that around 100,000 homebuyers are now trapped in contracts with spiralling ground rents.

In response, the government in England has consulted on leasehold reform and Westminster is expected to stamp out leasehold for “almost all” new new-build houses with ground rents on new long leases reduced to zero. The Welsh Government has also announced that housebuilders in Wales are no longer able to receive Help to Buy funding for new builds sold as leasehold unless they can present a genuine reason for retaining the freehold.

Commenting on the crackdown, Secretary of State for Communities, James Peter Brokenshire MP said: “This government is committed to tackling the unfair leasehold practices that exploit homeowners.

“We have already announced radical new measures to ban leaseholds for almost all new build houses and reduced rents to a peppercorn.

“I welcome these proposals by the Law Commission that will help homeowners get a fair deal.”

You can read the Law Commission’s proposals in full here 

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